China-based video streaming platform iQiyi will raise $2.25bn from its US initial public offering after pricing it at $18 per share, Reuters reported yesterday, citing a source familiar with the matter.
The company, which counts internet group Baidu as its majority shareholder and electronics manufacturer Xiaomi as another investor, is issuing 125 million American depositary shares (ADSs) priced in the middle of the IPO’s $17 to $19 range.
Founded in 2009 as Ding Xin, iQiyi runs an online streaming platform with 126 million daily mobile active users and 53.7 million daily active users on PCs. Its premium service has almost 51 million paying subscribers.
The company increased revenue by about 55% to almost $2.7bn in 2017, though its net losses rose slightly to $574m for the full year.
Baidu made its first investment in the company in 2010 alongside private equity firm Providence Equity Partners and took a majority stake in 2012 when it acquired shares from Providence.
Xiaomi’s corporate venturing unit, Xiaomi Ventures, Baidu and venture capital firm Shunwei Capital invested $300m in iQiyi in 2014. The company added $1.53bn from Baidu, IDG Capital, Sequoia Capital, Hillhouse Capital, Everbright-IDG Industrial Fund, Boyu Capital and Run Liang Tai Fund in February 2017.
Baidu owned a 69.6% share of iQiyi pre-offering that will be cut to almost 59%. Xiaomi’s 8.4% stake will be diluted to approximately 7.1% and Hillhouse’s from 5.7% to 4.8%, and iQiyi’s market cap will be almost $14.5bn.
Underwriters Goldman Sachs (Asia), Credit Suisse Securities (USA), Merrill Lynch, Pierce, Fenner & Smith, China Renaissance Securities (Hong Kong), Citigroup Global Markets and UBS Securities have a 30-day option to buy another 18.75 million ADSs, boosting the IPO size to almost $2.59bn.